Form 1099-INT is the information return that banks, brokerages, and other payers use to report interest they paid you during the year, and you use it to put the right numbers on the right lines of your Form 1040. Payers are required to send it whenever they pay $10 or more in interest, and they file a copy with the IRS at the same time, so the agency already has the figures before you file.1Internal Revenue Service. About Form 1099-INT, Interest Income Interest under $10 is still taxable even when no form arrives.2Internal Revenue Service. Topic No. 403, Interest Received
The Boxes That Change What You Do
The form has many numbered boxes, but only a handful decide where an amount goes on your return.
Box 1 holds ordinary taxable interest from savings accounts, checking accounts, CDs, and similar deposits. It is fully taxable at the federal level.3Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (Rev. January 2024)
Box 2 shows any early withdrawal penalty the bank charged when you broke a CD before maturity. This isn’t extra income. It’s a deduction you take separately.
Box 3 reports interest from U.S. Treasury bills, notes, bonds, and savings bonds. It’s taxable federally but generally exempt from state and local tax, which is why it sits apart from Box 1.3Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (Rev. January 2024)
Box 4 shows federal income tax withheld. Most people see zero. An amount here usually means the payer was required to apply 24% backup withholding, either because your W-9 was missing a valid Social Security number or because the IRS notified the payer that you’d previously underreported interest.4Internal Revenue Service. Backup Withholding Whatever was withheld counts as a credit against your tax.
Box 6 shows any foreign tax paid on interest from an account held abroad. You can generally claim it as a dollar-for-dollar credit on Form 1116.5Internal Revenue Service. Foreign Tax Credit
Box 8 reports tax-exempt interest, typically from state and local government bonds. It’s exempt from federal income tax, but you still list it on your return.3Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (Rev. January 2024)
Box 9 flags private activity bond interest. It’s part of tax-exempt interest for regular tax purposes but gets added back when you calculate the Alternative Minimum Tax on Form 6251.6Internal Revenue Service. Instructions for Form 6251 (2025)
Where the Numbers Go on Your Return
Each amount has one right home on Form 1040:
- Taxable interest (Boxes 1 and 3 combined) goes on line 2b.
- Tax-exempt interest (Box 8, including any Box 9 amount) goes on line 2a.
- Federal tax withheld (Box 4) goes on line 25b as a payment.
Report the full Box 1 amount even if Box 2 has an early withdrawal penalty. You take the penalty deduction separately rather than netting it against the interest.
When You Also Need Schedule B
If your total taxable interest for the year exceeds $1,500, you have to attach Schedule B.7Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends Part I lists each payer and the amount from each, and the total flows to line 2b. Schedule B is also required, regardless of the $1,500 threshold, if you received interest as a nominee for someone else or you’re claiming the education savings bond exclusion.
The Foreign Account Question
Part III of Schedule B asks whether you had a financial interest in or signing authority over a foreign account during the year. If you answer yes and your combined foreign account balances exceeded $10,000 at any point in the calendar year, you also have to file FinCEN Form 114, the FBAR. That report goes to the Treasury, not the IRS, and the deadline is April 15 with an automatic extension to October 15.8Internal Revenue Service. FinCEN Form 114 – Report of Foreign Bank and Financial Accounts
How the Interest Is Taxed
Interest is ordinary income. It gets added to wages and other earnings and taxed at whatever bracket the total lands in. For 2026, federal rates run from 10% to 37%.9Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Someone in the 22% bracket with $500 of bank interest owes roughly $110 of federal tax on it.
Higher earners face a second layer. When modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly), a 3.8% Net Investment Income Tax applies.10Internal Revenue Service. Topic No. 559, Net Investment Income Tax Taxable interest counts as net investment income for this purpose. Tax-exempt municipal bond interest does not.11Internal Revenue Service. 12Internal Revenue Service. Form 1116, Foreign Tax Credit
Situations That Need an Adjustment
Interest That Belongs to Someone Else
When a joint account reports all its interest under one Social Security number but part of it belongs to someone else, the person named on the form is a nominee for the other’s share. Issue a 1099-INT to the actual owner, then on Schedule B list all the interest first, subtotal it, and subtract the nominee share below the subtotal labeled “Nominee.” Only your share gets taxed to you.
Accrued Interest on a Bond You Bought
When you buy a bond between interest payment dates, you pay the seller for interest already accrued. The next coupon payment then arrives, and your 1099-INT reports the full amount, including the piece you already paid for at purchase. On Schedule B, list the full amount, then below the subtotal write “Accrued Interest” and subtract what you paid the seller.13Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses Skipping this step means paying tax on income that wasn’t yours.
Original Issue Discount
When you buy a bond for less than its face value, the built-in gain to maturity is original issue discount, and the tax code treats it as interest accruing each year even before you receive cash.14Office of the Law Revision Counsel. 26 USC 1272 – Current Inclusion in Income of Original Issue Discount Most OID is reported on Form 1099-OID rather than 1099-INT.15Internal Revenue Service. About Form 1099-OID, Original Issue Discount Short-term OID from instruments maturing in a year or less can appear in Box 1. Either way, it’s ordinary income.
U.S. Savings Bonds
Series EE and Series I bonds don’t generate a 1099-INT year by year under the default treatment. You defer reporting until you cash the bond, it matures, or you transfer it, at which point all the accumulated interest hits a single year’s return. You can instead elect to report the interest annually as it accrues, but the election applies to every EE and I bond you own and every future year, and reversing it requires IRS permission. If you cash EE or I bonds issued after 1989 to pay qualified higher education expenses, some or all of the interest may be excludable using Form 8815, subject to age, filing status, and income limits.16Internal Revenue Service. Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
If the Form Is Wrong or Never Arrives
If a number on your 1099-INT doesn’t match your records, contact the payer first and ask for a corrected form. If you can’t get one by the end of February, call the IRS at 800-829-1040 and they’ll follow up with the payer for you.17Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect If nothing arrives before your filing deadline, file with the best information you have. If a corrected form shows up later with different numbers, amend using Form 1040-X.
Interest under $10 rarely generates a form, but it’s still taxable.2Internal Revenue Service. Topic No. 403, Interest Received Pull your year-end statements, total the interest yourself, and report it the same way you would if a form had come.
What Happens If You Skip It
Because the payer files a copy with the IRS, unreported interest eventually surfaces through automated matching. When it does, you receive a CP2000 notice proposing the additional tax.18Internal Revenue Service. Topic No. 652, Notice of Underreported Income – CP2000 Ignore that notice and the IRS moves to a formal notice of deficiency and assesses the tax.
On top of the tax itself, the IRS can add a 20% accuracy-related penalty when the shortfall is due to negligence or a substantial understatement.19Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments Interest accrues on the unpaid balance from the original due date of the return, compounded daily. For the first quarter of 2026, the underpayment rate is 7%.20Internal Revenue Service. Quarterly Interest Rates On small forgotten amounts, penalties and interest can outrun the tax that was actually owed.
How Long to Keep the Forms
Keep 1099-INT copies and the underlying bank statements for at least three years from the date you file the return that reports them. If the IRS suspects you left off more than 25% of your gross income, the audit window stretches to six years.21Internal Revenue Service. How Long Should I Keep Records For savings bonds where you’ve been deferring interest, hold onto the purchase records until you file the return reporting the redeemed interest, which may be decades away.